This article was first published on ClearlySurely on 14 September 2018.
Make no mistake about it – in recent years, most of the spotlight (for Insurance) has been on Critical Illness Cover.
We would be hard pressed to recall a time in which there has been so much attention given to it, in terms of media coverage, studies, and the number of new products specifically launched to address the need for CI Cover.
So it was a rather welcome surprise when we got the invitation from Aviva to review their MultiPay CI Plan, and also shed some light as to how someone can obtain cover across all stages of Critical illness .
But first things first. Lets get the most important thing out of the way.
Critical Illness Cover is important – don’t let anyone tell you otherwise
According to Aviva’s Consumer Attitudes to Saving 2017, here are the top 3 causes for concern of Singaporeans:
- Serious Illness (55%)
- Insufficient money for Retirement (46%)
- Significant increase in the price of basic necessities / Losing my job (Joint Third – 40%)
So more than half of us are worried about the financial implications of a serious illness, and 4 in 10 Singaporeans feel they have adequate financial protection to tide them through if they are unable to work for a period of time. (38%)
Lest your inner critic dismiss these numbers as purely “based on opinion”, we turn to the Protection Gap Study of 2017 conducted by LIA for validation. And those aren’t pretty, as far as Critical Illness Cover is concerned.
It turns out for mortality (Death) cover, the red dot is 20% shy of what it needs. Not bad, really.
But for Critical Illness, that shortfall percentage is a whopping 80%. (538 Billion!) Source here.
For perspective, that collective shortfall means that if I needed 4 years to recover from a serious illness, my money would only last for the first 10 months.
For those of us that have the impression that CI only happens to the older folk (ie. Merdeka / Pioneer generation foggies ), here’s some sobering CI Claim stats from 2017:
|Aviva's 2017 Critical Illness Claims|
|Age group||% of claims|
|31 - 40||19%|
|41 - 50||42%|
|51 - 60||25%|
|61 - 70||8%|
61% of claims were made by people YOUNGER than the Merdeka generation
Its not all doom and gloom though. There is still some good news to share: Survival rates have at least doubled over the past 35 years.
All this sets the stage firmly to introduce My MultiPay Critical Illness Plan III, one of the latest products designed by Aviva to take Critical Illness head on.
My MultiPay Critical Illness Plan III – How it works
As far as MultiPay plans go, this one requires some effort to read and understand the exact workings of the product. In case you were wondering, they (Aviva) launched two prior iterations, hence the Plan III numbering.
Reminds me of stuff like King George the Third, but I digress.
We thought it best to explain twice, in varying differences of specificity.
The 30 Second Explanation
It is a plan that takes care of your coverage needs for Early, Intermediate, and Severe stage Critical illnesses.
Given 4 layers of cover, it is possible to receive up to 600% of your original sum assured over 5 payouts.
For a person that purchases 100k SGD of cover in the plan, the total payout could be up to 600k or more.
The more-than-30-Second Explanation
We explain the coverage provided by each layer here, to analyze how a person is entitled to up to 600% of their base sum assured.
Takes care of Early and Intermediate Stage Critical Illnesses, and allows you to claim up to 2 times, each for a sum assured of 100%. There is no waiting time requirement between each claim.
For example, Andy has Liver Cirrhosis diagnosed on Monday morning (no doubt caused by his penchant for Johnny Walker), and Severe Epilepsy diagnosed that very afternoon (no doubt caused by his doctor telling him to lay off Johnny Walker for good).
He is entitled to a total of 2 payouts, each for 100% of his original sum assured (that makes 200%, in case you do not have a calculator handy).
These Early/ Intermediate Stage CIs are split up into 3 different pots (Types), and you can only claim from each pot ONCE. If Andy’s diagnosis of Liver Cirrhosis was followed up with a need for Liver Surgery, then its no dice for the second claim, since they fall under the pot. (Sorry, buddy)
Takes care of Severe Stage CI, and allows you to claim once, from 100% to 300% of your base sum assured, depending on how much you’ve claimed from Layer 1. Similarly, there is no waiting time between Layer 1 and 2.
To illustrate, our same Andy suffers a heart attack of specified severity that very evening, and he is entitled to another claim of 100% of his sum assured. Notice he already has claims totaling 300%, with 200% from Layer 1.
Elsewhere, Bernard didn’t claim at all from Layer 1, but suffers a stroke upon hearing the evils that befell Andy (who happens to be his BFF). Bernard is entitled to a claim of 300%.
How much payout you get from Layer 2 depends on how much you’ve claimed prior from Layer 1.
No prior claim from Layer 1 : You get 300%
Regardless, once you’ve hit the safety net that is Layer 2, your total claims amount would be 300%. There will be a waiting period of 2 years before you can go on to claim from your next layer (Layer 3).
Takes care of Major Cancers, Heart Attacks or Strokes. Allows you to claim once, for 150% of your sum assured. Specifically:
First time Major Cancers / Heart Attack / Stroke
Re-diagnosed Cancer / Recurrent Heart Attack / Recurrent Stroke
Being the diligent folk that we are, here are the words/phrases that deserve special attention, and our laymen interpretation of them:
|First time||If you have not claimed for either of these 3 ailments before, under the plan|
|Major||Of specified severity, following the guidelines laid down by LIA (Life Insurance Association)|
|Re-diagnosed||Can either be related/caused/progressed from a prior cancer, or it can be a totally unrelated one|
|Recurrent||Must be unrelated to the prior one, separate, and not a progression of. It needs to be at a different location from the prior occurrence|
Once again we turn to our two heroes for clarity.
Andy laid off drinking after his health scare for 3 years and was minding his own business one evening when he discovered that mum threw out his favourite toy since childhood. (called Fuzz Liteyear or some such)
He promptly suffers a stroke and is entitled to claim for 150%, since it is his first time having a stroke under this plan.
Upon hearing the terrible news, Bernard too suffers a stroke again (he and Andy are really tight). Unfortunately, the neurologist determined the location of the haemorrhage to have occurred in the same location as before, which means it does not count as a recurrent stroke. No payout for Bernard, sadly.
Definitions are key here!
Re-diagnosed vs Recurrent may look similar to an in-attentive eye, but it makes a world of difference when it comes to claims.
There is also a waiting period of 2 years between Layer 3 and 4.
It is an exact replica of Layer 3, so there isn’t that much to say here that hasn’t been covered already. Andy emailed me to spare him further anguish, but I explained for the sake of completeness he has to undergo just one more ordeal.
5 years after his first stroke, Andy was browsing eBay and saw Fuzz Liteyear on auction. But he misclicked and lost the bid by 25 cents, promptly setting off another heart attack.
His cardiologist pinpointed the location of the attack in his LEFT ventricle, which is in a different location from his previous heart attack (in the RIGHT atrium). He is entitled to another 150% of sum assured under this plan.
Coincidentally (or maybe not), that brings his total payout for this plan to 600% of his base sum assured:
Liver Cirrhosis (Layer 1): 100%
Severe Epilepsy (Layer 1): 100%
Heart Attack (Layer 2): 100%
First time Stroke (Layer 3): 150%
Recurrent Heart Attack (Layer 4): 150%
Bernard wasn't affected by this and visited Andy in hospital. (Plot twist: He was the one that outbid Andy anyway, and gave Fuzz back for Christmas that year). They both lived happily ever after.
Net Net : The Clearly Surely Summary
The first 2 layers combined take care of Early Stage, Intermediate, and Late Stage CI with relatively few restrictions. You will get 300% of payout in total once you claim under Layer 2, but no more than that.
The next 2 layers are primarily for Major Cancers, Heart Attacks and Strokes. There are more restrictions involved, and there is another 300% of payout available.
What we like about the plan
Across all stages of CI, there is sizable cover to be had. The first 2 layers are what we really look out for, and the final 2 layers are more of a bonus than anything else. For someone lacking CI cover completely, we can think of few better plans to address that shortfall.
Its cost effectiveness
We employed the much debated scientific analysis rigor called Agar- ation to see how much it would cost us to approximately duplicate the coverage provided.
A 30 year old male non-smoker can expect to pay $1,369 annually for 45 years of cover under My MultiPay CI Plan III.
Our lowest estimate for duplicating the early, intermediate and late stage CI cover amounts starts from $1,855 and beyond. A true duplication of the plan is not possible due to probability but this estimate is enough (in our own view) to underscore the cost effectiveness of the plan.
Improvements we would like to see
Being perfectionists, there are always things that can be improved in our opinion, even though practical execution is another matter altogether. (But happily enough, not our problem)
- A simplified product to understand
I did wish that the product was a lot simpler to understand and hence explain. The ideal standard is a product that can be understood completely even after drinking 3 beers (note: I tried)
This article needed 5 coffees, of which 2 were triple shots. And I had to stop browsing 9gag for a full day to concentrate.
- Removal of the onerous definitions in Layer 3 and 4
Re-diagnosed and Recurrent could be effectively removed, because I doubt the need for such precise definitions that could reject a claim on technicality .
Any person that suffers a Cancer/Heart Attack/Stroke deserves a payout! Who cares if its his first time or it happens at the same location. Seriously.
- An Interactive Web Illustration would go a long way
Judging from the amount of ads we’ve seen pertaining to this product, and the revamped site of Aviva (it looks way better these days), it wouldn’t really be a stretch to include a interactive section online to show / demonstrate how this product works and what are its limitations when it comes to payout.
I know Andy and Bernard would appreciate that.
To wrap up
We would like to thank Aviva for being gracious and inviting us to review the plan. Especially grateful for the key statistics and insights shared, that give our readers a clearer idea of how important Critical Illness cover is.
It was fun indeed to think of the conditions and harrowing experiences our heroes had to undergo, and we definitely have not covered all the payouts available. Any mistakes or omissions, if present, are entirely our own.
Speak to your trusted financial advisory representative to understand more, and always make an informed decision.
Till next time!
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